Debt is that four letter word which everyone is afraid of. While getting into debt problems is pretty easy, coming out of it could be equally tough. Following the recent economic havoc of 2008, loads of individuals have been crushed under an incredible load of debt. Times are tough and it’s not really shocking for people to face an overwhelming amount of debt. Under such financial circumstances, a lot of people seriously consider bankruptcy as a viable solution for their debt problems. Although it’s not always the best answer to your fiscal problems, if often turns out to be the only option when confronted with unrelenting debt collectors. However, Chapter 11 bankruptcy remains on your credit report for as long as 10 years from the day of filing. When you file for bankruptcy, it lowers your credit score by 200 to 350 points. You might face difficulty in obtaining a credit card, a mortgage or a car loan. Once you file for Chapter 11 bankruptcy, you won’t be allowed to file bankruptcy again in the next six years.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a kind of reformation bankruptcy. This is quite analogous to Chapter 13 bankruptcy, which necessitates you to pay off debts within a time span of three to five years. Chapter 11 bankruptcy is the most expensive kind of bankruptcy. It’s generally filed by big companies, but people who opt for Chapter 11 bankruptcy have tax issues and mortgage foreclosure matters under control. According to recent reports, nearly 1.6 million people file for Chapter 11 bankruptcy every year.
Ownership and Lease
Once you file for Chapter 11 bankruptcy, you may have to face a lot of problems in buying a house or renting a flat. Although you won’t be able to meet the criteria for a home loan instantly after filing, most individuals are capable of obtaining a mortgage two years subsequent to filing bankruptcy. Moreover, a lot of landlords will verify your credit report before you’re allowed to sign a lease. In accordance with Bankruptcy Info Network, a number of rental assets aren’t really keen on providing accommodation to people having a bankruptcy on their record.
You have the option of rebuilding your credit score once you’ve filed for Chapter 11 bankruptcy. The first thing that you need to do is to make your bill payments on time. If you default on your bill payments or make late payments, it will have a further negative effect on your credit report. In accordance with Bankruptcy Law Firms, if you hold a mortgage, a student loan, or an auto loan, making timely disbursements on these can help you increase your credit score.